Trading Places: An Interview with Morris Smith

How one man walked away from power and prestige to truly have it all.

In his brief tenure as manager of the world renowned Magellan Fund, Morris Smith achieved a level of success that most others can only dream of – he held one of the most profitable and prestigious positions on Wall Street, controlling billions of dollars in what was then the world's largest mutual fund.

But Smith also had the courage to go and do something that most others would never even dare dream of. After just two years as manager of Fidelity Investment's Magellan Fund, the 34-year-old Smith walked away from all his success and from what he himself described as a once-in-a-lifetime opportunity in order to pursue his own very different dream of spiritual fulfillment, closeness to God, and a meaningful life.

Smith took over the Magellan Fund in 1990 from the legendary Peter Lynch, who had transformed the once little-known mutual fund into the world's largest and among the most profitable. Lynch had built up Magellan from just $20 million when he took the helm in 1977 to $13 billion when he resigned 13 years later.

Smith's performance as Lynch's replacement was generally viewed as outstanding. Under his management, the Magellan Fund soared from $13 billion to $20 billion, beating the stock market by nearly seven percent over the two years Smith was in charge and posting a performance in the top 15 percent of all growth funds.

(Today the Magellan Fund is the world's second largest mutual fund with a staggering $109 billion in assets but is closed to new investors.)

Smith, an observant Jew, acknowledges that he was under a great deal of pressure from Wall Street, Fidelity and Magellan investors to perform as well as Lynch when he took over the fund in 1990. "I think the biggest issue that existed when I took over the fund was whether there was really life after Peter Lynch. So much of Fidelity's name, the impressions that the investment world had about Fidelity, revolved around the personality of Peter Lynch, and there was a perceived risk to the company that we could have a significant shrinkage in our assets if I did really poorly.

"Thankfully the fund did well and we continued to grow. Fidelity now has over a trillion dollars in assets and has gone on and done very successfully through the 1990s. I felt I had a small part to play in that," says Smith, now 43.

As an observant Jew controlling billions of dollars of other people's money, everything you do is magnified.

But even more than his performance, Smith was concerned about the possibility that, as an observant Jew controlling billions of dollars of other people's money in a very public position, he might do or say something that could lead people to view Jews, God or Judaism in a negative light.

"People knew that I was an Orthodox Jew in the work force and when you're an Orthodox Jew you're symbolizing certain values. Everything you do is magnified either in a positive way or a negative way, and I felt that, to some degree, I was representing the Jewish people, and I just wanted to make sure that everything I did would be done in a very straightforward fashion.

"Thankfully, the fund did well and there wasn't anything very negative written about me personally," says Smith, who was raised in an Orthodox family in the Flatbush section of Brooklyn, New York.

Smith launched his career at Fidelity Investments in 1982 at the age of 24 after graduating from the prestigious Wharton Business School with an MBA. He started out as an investment analyst, researching companies and making stock recommendations. Two years later, he started managing money for the first time.

From 1984 until 1986, Smith ran Fidelity's Select Leisure Fund, which soared from $500,000 to $350 million under his management. Then for the next four years he managed an average of $1 billion in the Fidelity Over-the-Counter Fund. And finally in 1990, at just 32, Smith took over Fidelity's premiere and most successful fund by far -- the then $13 billion Magellan Fund. Wall Street, Magellan shareholders and Smith's own colleagues were stunned by his meteoric rise.

A humble Smith attributes his enormous success to the bull market of the early 80s and to being in the right place at the right time, rather than to his own personal talent. "I really attribute my rapid success at Fidelity to being a victim of positive circumstances. I was very fortunate to start in the investment business in 1982. It was the beginning of a bull market and a lot of opportunities opened up for me because of the phenomenal growth at Fidelity. We got in a flood of money and basically a lot of the young people who started with Fidelity in the early 80s got pushed into very responsible positions.

"I was running money after only two years at Fidelity. I was running a billion dollars at the over-the-counter fund after just four years. That was unheard of in those times in the investment business. I was very fortunate. It was an accident of circumstances and fortunately I did okay as a fund manager, and then as far as taking over Magellan, I just happened to be the right person at the right time.

"It made the most sense to put me in that position given the personnel situation at Fidelity – who was running other funds. When they offered me the position, it was very hard to say no to it because it was a once in a lifetime opportunity."

There is much more to life than material success.

It was precisely because he enjoyed such enormous success that Smith felt he had attained all of his professional goals and decided that the wealth and power he had achieved were not enough for him. There was much more to life than material success, Smith thought, and he had the remarkable daring and courage to walk away from one of the most profitable and prestigious positions on Wall Street.

"As a professional I felt accomplished. I had been in the business 10 years, and every year I ran money, I had beaten the market. I felt that in the end I was working more and more for the money. I was enjoying the job less and less given the time constraints that Magellan was putting on my life.

"And when you start thinking to yourself that you are working for the money and not for any other reason, it really lessens to some degree the enjoyment you have for the job. Thank God I was paid well enough at Fidelity that I was able to take a break from it at that point. So I decided that I really wanted to shift some of my time and priorities and spend it in other areas of my life."

But Smith didn't just leave Fidelity to rest on his laurels, live in the lap of luxury, and enjoy his wealth. He left all that money, power and prestige behind to seek deeper meaning in his life – to find spiritual fulfillment, get closer to God and to spend more time with his family. Smith picked up his life and his family and moved thousands of miles away to Israel to learn Torah in Yeshiva, (a Jewish seminary), and to fulfill a dream to spend a sabbatical year in Israel. Both he and his wife had developed a strong attachment to Israel when they spent time there as students, and they had returned there nearly every vacation during their first 13 years of marriage.

Morris Smith and his wife, Devora.

Smith and his wife, Devora, loved living in Israel so much that the sabbatical year turned into seven years. They wanted to stay longer but had to return to the United States for personal reasons. Their return to the U.S. turned into a long-term commitment but they do hope to return to Israel as soon as possible. "I loved living in Israel and I miss it very, very badly today."

We don't put enough emphasis on our relationships between man and man.

Smith says that his Torah learning in Israel fostered his personal growth, strengthened his connection to God and the Jewish people, and helped him improve his relationships with his fellow man. "We tend to put a tremendous emphasis on the laws involving the ritual aspects of Judaism -- on the relationship between man and God -- but we don't put enough emphasis on our relationships between man and man."

Smith now lives in Lawrence, N.Y. with his wife and four of his children. His eldest son lives in Jerusalem, where he learns in Yeshiva. Smith still studies Torah about 30 hours a week, getting up at very early hours in order to squeeze the learning into his busy schedule. He spends much of the rest of his days managing his own money, mostly in U.S. and Israeli equities, but also works one to two days a week as a strategic and financial consultant.

Smith says he keeps his money very concentrated in 10 to 15 stocks. "I try to do as good a job as possible. I call my companies, keep up on research, and enjoy what I'm doing."

Smith also spends a great deal of time working with numerous charitable organizations, mostly dedicated to Jewish causes. "There's probably not a single day in the work week where something doesn't come up related to tzedaka (charity)."

Dispensing God's wealth is a responsibility that you have to take seriously.

Even though Smith sometimes feels the pressure of time constraints, he believes that having the financial resources to give tzedaka is a gift that God has bestowed upon him to help improve the world. "You're really the intermediary to dispense God's wealth to good causes throughout the world so it's a responsibility that you have to take seriously."

In fact, when asked how having financial resources has changed his life, Smith says that the nicest thing about it is that "it gives you a chance to give a lot more charity and to really get involved in tikun olam (fixing the world). You can direct money to projects that can really help mankind."

Other than affording him the ability to give tzedaka, Smith is grateful for no longer having one of the great stresses of life – the financial pressure to make ends meet. "It is a tremendous blessing from God. But all in all, wealth hasn't changed me much. I always was, and still am, a pretty simple person."

Since leaving Fidelity back in 1992, Smith's main purpose in life has indeed been tikun olam, and in his opinion, the best way to go about fixing the world is to first reawaken the Jewish people, and then the rest of the world, to their need for a relationship with God.

"What I think is critical is that everybody should have a much greater awareness of God in their life, to realize that everything that we experience in this world is really a blessing that God has given to us. And that we are all servants of God, and what we do in this world is really a reflection of our relationship with Him. As long as we have in mind that relationship and how we're trying to improve it on a day-to-day basis, then we can really be accomplished human beings," says Smith.

But even back at Fidelity when Smith was still focused on managing billions of dollars, his first priority was still bringing God and holiness into the world. He never worked on Shabbat or Jewish holidays, even taking off the Thursday and Friday that preceded the infamous stock market crash of October 1987 known as Black Monday. While nobody knew the crash was coming that Monday, the stock market slid 10 to 15 percent the previous week, but Smith took off for the Jewish holidays of Shemini Atzeret and Simchat Torah.

Asked if he has any regrets over not working those last two days before Black Monday, Smith says: "People think they're irreplaceable. The truth is that nobody in life is irreplaceable. We think if, God forbid, we get run over by a truck or a bus, the business won't go on and that is just not true. To some extent, I think that was proven. I lived through it, because I replaced Peter Lynch and Fidelity has gone on for years and years without me and without Peter ... There was never a question in my life about putting my work before Shabbos."

Even though Smith left behind a hugely successful career to pursue other, more meaningful dreams, he looks back on his years at Fidelity with great fondness. "It was the best job in the world and I still look back at it as a tremendous, tremendous field. I really love the industry."

Featured at Aish.com:

About the Author

Gail Schiller is a free-lance writer and mother of five living in Los
Angeles. She worked as a correspondent and editor for Reuters News Agency in
its Jerusalem, New York and Los Angeles bureaus for 10 years. She has also
written for People Magazine and Newsday and previously worked as assignment
editor for Olam Magazine.

The opinions expressed in the comment section are the personal views of the commenters. Comments are moderated, so please keep it civil.

Visitor Comments: 9

(9)
Justin Fishbein,
July 30, 2001 12:00 AM

Incredible

Morris Smith is someone all Jews should strive to be like. Leaving fame and fortune all behind to pursuit clossness to GOD. Billions of people across the world would have sold their soul to have been in his shoes. And I guarantee only a few thousand, maybe, would have given it all up for Israel. He is a hero to me. God Bless him.

(8)
Anonymous,
July 25, 2001 12:00 AM

A man who understands that giving is the most important thing in a meaningful life.

The article was well written and very inspirational. Not too many people can walk away from fame and fortune. He understood what was important in life and went to Israel to learn.

(7)
Dahlia,
July 25, 2001 12:00 AM

another Wall Streeter who walked away

I worked in equity arbitrage for a prestigious global firm. My daily aim was to try to infuse a bit of God's holy light into the dense materialistic atmosphere. In that environment, Morris Smith was *much more successful* than I, both spiritually and materially! In the end, it took 6 months to recover my health after quitting (stress had so depleted my body of vital nutrients I could barely grow fingernails!).

I, too, took a several year sabbatical to study and strengthen myself spiritually, and tried to return to Wall Street. Couldn't do it. Too much temptation. Could no longer "play the game."

I now live *much* more modestly (not just in terms of personal comportment, but also I mean financially), and have been astounded to find I can live quite happily on significantly less than $50,000 annually--not to mention upwards $100,000 ... $500,000 ... $1 million or more annually!

As the old saw goes, happiness is an inside job. You can't buy it. I am sympathetic with "sirfunky_1@yahoo.com" who says he has to "punch a clock." I am so grateful to have been given the opportunity to work on Wall Street and to walk away--I might have still thought my life would be better "if only" I had more money. From experience I can now understand the wisdom of Pirke Avos (paraphrased): "Who is rich? He who appreciates the value of all he now has."

(6)
Anonymous,
July 24, 2001 12:00 AM

this story is very moving and particularly inspirational as to what G-d can do when one has faith to allow G-d to work in one's life. one can wish for his continued success and that he continue to be an inspiration to others!

(5)
,
July 24, 2001 12:00 AM

A nice story, but...

I imagine how different my life would be if I had the financial ability to `walk away' as Morris Smith. Instead, I need to punch a clock to make ends meet. Regretfully, not nearly enough time is left for Torah study. Having said this, I trully admire this man and what he stands for. If only more high rollers in the Jewish community would opt instead for a Torah lifestyle...a far preferable example for our children.

(4)
Anonymous,
July 24, 2001 12:00 AM

inspirational message

I commend Morris Smith for his ability to stay focused on life's truly important purpose. In an ever-increasing material world, it takes courage and a solid grounding to keep things in perspective.

One criticism I have with the article is its tendency to glorify the wealthy as role models-that one need to be super successful and a giant in his/her field to be worthy of acclaim.

(3)
GABRIEL HEFFES,
July 23, 2001 12:00 AM

an excellent article to establish priorities in life

(2)
Linda Wheeler,
July 23, 2001 12:00 AM

Staying simple in a complex world.

The virtue that Morris Smith exemplifies is the ability to live simply in a cluttered and confusing world by keeping his eyes on G-d. What a powerful example.Thank you for sharing this. LSW

I’m wondering what happened to the House of David. After the end of the Kingdom of Judah was there any memory what happened to King David’s descendants? Is there any family today which can trace its lineage to David – and whom the Messiah might descend from?

The Aish Rabbi Replies:

Thank you for your good question. There is no question that King David’s descendants are alive today. God promised David through Nathan the Prophet that the monarchy would never depart from his family (II Samuel 7:16). The prophets likewise foretell the ultimate coming of the Messiah, descendant of David, the “branch which will extend from the trunk of Jesse,” who will restore the Davidic dynasty and Israel’s sovereignty (Isaiah 11:1, see also Jeremiah 33:15, Ezekiel 37:25).

King David’s initial dynasty came to an end with the destruction of the First Temple and the Babylonian Exile. In an earlier expulsion King Jehoiachin was exiled by Nebuchadnezzar, together with his family and several thousand of the Torah scholars and higher classes (II Kings 24:14-16). Eleven years later the Temple was destroyed. The final king of Judah, Jehoiachin’s uncle Zedekiah, was too exiled to Babylonia. He was blinded and his children were executed (II Kings 25:7).

However, Jehoiachin and his descendants did survive in exile. Babylonian cuneiform records actually attest to Jehoiachin and his family receiving food rations from the government. I Chronicles 3:17:24 likewise lists several generations of his descendants (either 9 or 15 generations, depending on the precise interpretation of the verses), which would have extended well into the Second Temple era. (One was the notable Zerubbabel, grandson of Jehoiachin, who was one of the leaders of the return to Zion and the construction the Second Temple.)

In Babylonia, the leader of the Jewish community was known as the Reish Galuta (Aramaic for “head of the exile,” called the Exilarch in English). This was a hereditary position recognized by the Babylonian government. Its bearer was generally quite wealthy and powerful, well-connected to the government and wielding much authority over Babylonian Jewry.

According to Jewish tradition, the Exilarch was a direct descendant of Jehoiachin. The Talmud (Sanhedrin 5a) understands Genesis 49:10 – Jacob’s blessing to Judah that “the staff would not be removed from Judah” – as a reference to the Exilarchs in Babylonia, “who would chastise Israel with the staff,” i.e., who exercised temporal authority over the Jewish community. It stands to reason that these descendants of Judah were descendants of David’s house, who would have naturally been the leaders of the Babylonian community, in fulfillment of God’s promise to David that authority would always rest in his descendants.

There is also a chronological work, Seder Olam Zutta (an anonymous text from the early Middle Ages), which lists 39 generations of Exilarchs beginning with Jehoiachin. One of the commentators to Chronicles, the Vilna Gaon, states that the first one was Elionai of I Chronicles 3:23.

The position of Exilarch lasted for many centuries. The Reish Galuta is mentioned quite often in the Talmud. As can be expected, some were quite learned themselves, some deferred to the rabbis for religious matters, while some, especially in the later years, fought them and their authority tooth and nail.

Exilarchs existed well into the Middle Ages, throughout the period of the early medieval scholars known as the Gaonim. The last ones known to history was Hezekiah, who was killed in 1040 by the Babylonian authorities, although he was believed to have had sons who escaped to Iberia. There are likewise later historical references to descendants of the Exilarchs, especially in northern Spain (Catelonia) and southern France (Provence).

Beyond that, there is no concrete evidence as to the whereabouts of King David’s descendants. Supposedly, the great French medieval sage Rashi (R. Shlomo Yitzchaki) traced his lineage to King David, although on a maternal line. (In addition, Rashi himself had only daughters.) The same is said of Rabbi Yehuda Loewe of Prague (the Maharal). Since Ashkenazi Jews are so interrelated, this is a tradition, however dubious today, shared by many Ashkenazi Jews.

In any event, we do not need be concerned today how the Messiah son of David will be identified. He will be a prophet, second only to Moses. God Himself will select him and appoint him to his task. And he himself, with his Divine inspiration, will resolve all other matters of Jewish lineage (Maimonides Hilchot Melachim 12:3).

Yahrtzeit of Kalonymus Z. Wissotzky, a famous Russian Jewish philanthropist who died in 1904. Wissotzky once owned the tea concession for the Czar's entire military operation. Since the Czar's soldiers numbered in the millions and tea drinking was a daily Russian custom, this concession made Wissotzky very rich. One day, Wissotzky was approached by the World Zionist Organization to begin a tea business in Israel. He laughed at this preposterous idea: the market was small, the Turkish bureaucracy was strict, and tea leaves from India were too costly to import. Jewish leaders persisted, and Wissotzky started a small tea company in Israel. After his death, the tea company passed to his heirs. Then in 1917, the communists swept to power in Russia, seizing all of the Wissotzky company's assets. The only business left in their possession was the small tea company in Israel. The family fled Russia, built the Israeli business, and today Wissotzky is a leading brand of tea in Israel, with exports to countries worldwide -- including Russia.

Building by youth may be destructive, while when elders dismantle, it is constructive (Nedarim 40a).

It seems paradoxical, but it is true. We make the most important decisions of our lives when we are young and inexperienced, and our maximum wisdom comes at an age when our lives are essentially behind us, and no decisions of great moment remain to be made.

While the solution to this mystery eludes us, the facts are evident, and we would be wise to adapt to them. When we are young and inexperienced, we can ask our elders for their opinion and then benefit from their wisdom. When their advice does not coincide with what we think is best, we would do ourselves a great service if we deferred to their counsel.

It may not be popular to champion this concept. Although we have emerged from the era of the `60s, when accepting the opinion of anyone over thirty was anathema, the attitude of dismissing older people as antiquated and obsolete has-beens who lack the omniscience of computerized intelligence still lingers on.

Those who refuse to learn from the mistakes of the past are doomed to repeat them. We would do well to swallow our youthful pride and benefit from the teachings of the school of experience.

Today I shall...

seek advice from my elders and give more serious consideration to deferring to their advice when it conflicts with my desires.

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